Sung Yun-mo: "Low-credit Auto Parts Companies Neglected in Financial Support... Need to Address Blind Spots"

Sung Yun-mo, Minister of Trade, Industry and Energy./Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kim Bo-kyung] Sung Yoon-mo, Minister of Trade, Industry and Energy, emphasized the need to expand financial support on the 15th regarding the domestic automobile parts industry, stating, "There are blind spots in support for parts companies with low credit ratings and mid-sized companies."

On the same day, Minister Sung attended the 'On-site Meeting to Revitalize the Automobile Industry through Win-Win Cooperation' held at Korea FT Pangyo Research Institute together with Eun Sung-soo, Chairman of the Financial Services Commission.

The meeting was attended by completed car manufacturers such as Hyundai Kia Motors and Korea GM, four first- and second-tier parts suppliers, the Automobile Industry Association, and the Automobile Industry Cooperative Association, where industry difficulties and requests were conveyed.

The automobile industry has been facing difficulties such as reduced orders and liquidity shortages for our parts companies due to a sharp decline in overseas demand caused by the spread of the novel coronavirus disease (COVID-19) earlier this year.

In his opening remarks, Minister Sung conveyed this situation, stating, "We expect export conditions to gradually improve from June, but the industry's resilience has significantly weakened due to the accumulated burden of fixed costs during this period."

He also said, "Due to the nature of the automobile parts industry as a capital-intensive industry, the debt ratio is high," adding, "Many companies face difficulties with their credit ratings as mold and equipment investments are concentrated in line with the launch of various new cars."

He further pointed out, "Because of this, there are cases where additional financial support requests are ignored at bank counters."

Minister Sung stated, "The automobile industry is responsible for 400,000 jobs, the largest scale in manufacturing, and is a core key industry with significant ripple effects on other industries," emphasizing, "Our parts industry is what supports this core key industry, the automobile industry."

He also mentioned, "It is true that there are blind spots in support for parts companies with low credit ratings and mid-sized companies," and added, "Our automobile parts companies are confident that if they overcome the liquidity crisis caused by COVID-19 and other factors, they will lead the post-COVID era."

Finally, Minister Sung urged, "I hope financial institution heads encourage and support the field so that support measures at bank counters operate smoothly and our parts companies can feel the effects."

Meanwhile, the completed car industry signed a win-win guarantee agreement last week to protect parts companies and stabilize the supply chain. The government started an electric vehicle technology development project worth 380 billion won this year to support the transition to future vehicles. A 1 trillion won autonomous driving technology development project is also scheduled to be fully launched from next year.

This content was produced with the assistance of AI translation services.